HomeTechnologySnap Inc. Shares Drop By 20% Amid Weak Q1 Earnings

Snap Inc. Shares Drop By 20% Amid Weak Q1 Earnings

Snap Inc, the parent company of Snapchat, has reported weak first-quarter earnings that sent its stock spiraling. Snap’s shares plunged by almost 20% percent at one point, marking their biggest drop in six months.

Snap struggled to drive up advertisement demand, facing the same problem it had in the previous few quarters. High-interest rates are cutting into ad budgets across most industries, which has a direct impact on the earnings of companies that heavily rely on revenue from advertisements like Snap.

The company’s revenue came at $988 million compared to the $1 billion that Wall Street analysts expected. This is 7% less than the same period in 2022 and represents the first time that Snap had a loss in revenue since becoming a publicly traded company in 2017.

Investors were also not impressed by the fact that Snap was conservative in its second-quarter revenue forecasts. The company predicts to have $1.04 billion in revenue versus the estimated $1.1 billion by analysts.

“We are working to accelerate our revenue growth, and we are using this opportunity to make significant improvements to our advertising platform to help drive increased return on investment for our advertising partners,” CEO Evan Spiegel said in a statement.

Snap’s shares closed at $8.71 on Friday, and the stock is currently down 1.58% year-to-date.

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